Cisco acquires David Ulevitch’s cloud security company OpenDNS for $635 Million

Networking technology giant Cisco has announced that it is acquiring cloud-based security company OpenDNS, in a deal worth $635 million in “cash and assumed equity awards, plus retention based incentives for OpenDNS.” The security business represented about 4.3% of Cisco’s overall revenue in 2014.

OpenDNS was founded in 2006 by David A. Ulevitch, 33. It provides a cross-platform online threat-protection service that Cisco says it will use to boost its own security.

The San Francisco-based company claims 65 million users and operates from 25 data centers. It maintains a network of domain name servers to help route Web traffic in competition with those provided by Internet service providers and telecommunications carriers.

Individuals and companies use OpenDNS services to reach websites more quickly, among other purposes. Cisco said.

In recent years, OpenDNS shifted its strategy to stress security services based on its network. The company has said its services can help block computer attacks from particular Internet domains, for example, and can encrypt Web traffic in ways that limit eavesdropping and other threats.

Cisco, based in San Jose, Calif., is best known for routing and switching systems used to handle Internet traffic and move information within corporate data centers. But the company has also been building a large business offering security software and services.

OpenDNS has raised $50 million in funding to date, including a $35 million round last May.

The deal is expected to close in the first quarter of 2016, when the OpenDNS team will join the Cisco Security Business Group. David Ulevitch, founder and CEO of OpenDNS, said, “We’re not going anywhere and OpenDNS as you know it will continue to work as it does today.”

In 2014 Cisco acquired cybersecurity firm Sourcefire for $2.7 billion and bought malware-detection technology company ThreatGrid Inc., report WSJ